Hidden reasons why wealth and investment projects fail

Whatever their scale, projects flounder for the same reasons

Despite decades of ‘transformation’, few firms have a real grasp of project requirements when mobilising and executing change. Here are a few less obvious reasons why projects flounder or fail (and what you can do about them).

Misunderstanding Project Sponsorship

Wealth and investment firms are not typically broad or deep in their change delivery capability. This is deliberate, as there is a limited case for a permanent team of experienced change and transformation staff. But it means that, when projects are performed, the pivotal role of Project Sponsor is under-prepared or overlooked. All too frequently, this key role is assigned to an existing member of the executive, who may well never have been a sponsor before, and who makes it up as they go.  And, since that sponsor is usually expected to be an authoritative decision maker, once the project is underway, it’s hard to challenge or influence a senior colleague towards alternative thinking.

Tell-tale signs include sponsors who:

  • ‘check in’ from time to time but keep their projects at an arm’s length distance
  • are not fully empowered to fully perform the role or who didn’t realise what was expected of them
  • believe they should act as the primary problem solver, thus often overlapping with project manager(s) or other participants
  • only perform one aspect of sponsorship, such as ensuring funding is in place or certain levels of management communication
  • have such wide and diversified goals that they simply don’t feel dedicated to the particular project

If any of these sound familiar, it’s time to give the sponsor best practice understanding of the role, and to help them to communicate and agree this with all relevant stakeholders. 

Miscommunicating the target vision

Many projects are still undertaken based purely on a conceptual vision, a limited set of objectives or an executive’s compelling wish to implement a favourite system or service. The classic trap is to describe vision in terms of solution. Words to watch out for include “we are trying to build one of these“, or “we are trying to deploy this solution“. Solution-based visions have their place, but they must be put into context and aligned with corporate strategic thinking.

By contrast, the thinking you want to hear articulated should run along these lines:

  • our business mission is to become … a leading provider of managed portfolio services
  • our business strategic drivers are … business growth, new service lines, different client profiles
  • the business outcomes and benefits we are seeking are …  an increase in AuM, access to the High Net Worth retail investment client base
  • to achieve this, we are therefore … creating new investment models, developing a new centralised investment function
  • and in order to do that, we are … undertaking a project to define a new business model, select, and implement a new platform service

Having a clear and well-articulated vision that joins up all elements of business strategy, business outcomes, solution vision and project shape gives stakeholders an essential foundation story that can be told throughout the project lifecycle. It provides a clear and consistently repeatable narrative to which they can return when reminding themselves, and others, why they are doing the project and what needs to be achieved.

No vision is complete without a blueprint or definition of the future operating state and a target operating model. Good models set a vision for business functions and processes, technology systems and services, people, organisations and data.

Time spent on a clear vision is time well spent – not least as a clear vision is a key prerequisite for the building of a compelling business case. Given that few wealth and investment firms have the in-house skills or wider market knowledge to do this well, external experts can create this with speed and efficiency.

Risking mission creep

This is common. As project teams and stakeholders naturally apply themselves to the design, delivery and testing of target solutions, the original business outcomes and target benefits take a back seat. This heightens the risk that solutions are delivered which don’t meet the original business objectives or even miss some entirely, and that the project itself is delayed, as the scope expands beyond its original remit.

  • One way to address this is to position the project to considers business outcomes at each stage of its lifecycle, not just at the beginning and end, when the solution detail is either unclear, or when it may be too late to alter the solution.
  • Best practice projects include a Target Operating Model workstream that runs constantly during the project, safeguarding the target vision and acting in a business architect role to ensure all detailed design decisions remain aligned to the original target business outcomes.
  • As the project frames itself for the final stages of implementation, the Target Operating Model stream includes Business Readiness activities, ensuring that testing, data preparation and user training exercises all fully consider business outcomes in their respective design and execution.

Of course, to embed business outcome elements throughout the project life cycle requires a certain business mindset and therefore a commitment from all to ensure business expertise is available and dedicated to the project process. In smaller wealth and investment firms in particular, this is not always possible to achieve.

Lacking domain expertise

The ability to design, test and problem solve effectively is often frustrated by a lack of detailed business knowledge. In-house staff with good business knowledge are often seconded to projects without the suitable skill to perform project activities, or armed only with knowledge that is too localised to their own organisation and sphere of understanding. This makes it a real challenge to consider new and alternative work practice methods from elsewhere or emerging as important developments for wealth and investment firms. If this project knowledge gap remains unaddressed, projects will take longer to complete and risk doing so with an outcome that looks worryingly similar to the original starting position.

There are only two ways to address this:

  • either recruit externally where this experience is available and affordable;
  • or deploy short-term business expertise from a reputable consultancy with deep domain expertise.

Losing your ‘by the business, for the business’ mindset

‘Business readiness’ typically refers to the project phases of testing/rehearsing, process/procedures preparation, business training and business transition/cutover, although it can involve less or more, depending on the initiative. Worryingly, many businesses delegate responsibility for business readiness to the project group, rather than empower themselves to take it on. 

This is a mistake.

Strong business leadership and participation is essential. It engenders a culture of business people delivering to the business functions, so that the whole transition from old to new state feels like it’s being performed by the business, for the business, not delivered at a distance by a slightly detached project-based team.

Business stakeholders should also be encouraged to define their own criteria for going live with a project and setting the tone for what evidence will be required to accept an impactful change into live service.

Best practice projects enable a form of business readiness reporting where a scorecard can be used to assess how close the business feels ready for the implementation of change, not only on factual measures but on sentiment-based ones too.

Failing to perform a benefits realisation phase

Most projects see the implementation as the project finale, leaving the realisation of benefits to float in the wind. The project team (sometimes including the sponsor) complete the project on a working assumption that because the solution has been successfully delivered, the expected benefits will be certain to be realised all by themselves.

This is not the case.

We have also seen projects where the original benefits have been lost or diluted over time and measurement against them becomes difficult or no longer possible.

Our view is that every project should have a benefits realisation exercise built into its overall plan, even if this months after go live event. A structured reflection should be performed against the original benefits, both quantifiable and intangible with a monitoring process and with clear ownership established. Reporting and embedding of realised benefits is absolutely key to the perception and reality of project success.

How can it be done better?

Too many projects struggle or fail because of entirely avoidable reasons. To avoid these pitfalls, we advise clients to:

  1. Prepare and equip project sponsors to perform their role as effectively as possible.  We do this by providing sponsorship skills training as an essential component of project mobilisation.
  2. Ensure that there is a clear articulation of the target vision, with a strong emphasis around business outcomes, target benefits and the target operating model.
  3. Build in business outcome-oriented thinking into all stages of the project life cycle, not just the early stages of definition and business case development.
  4. Draw on business expertise wherever this is needed and encourage a climate that is open and receptive to change from current working practice.
  5. Empower the business to take control of its own transformation and change readiness activities and to take into account sentiment as well as factual information.
  6. Invest in the development of a clear and compelling benefits story and make sure a benefits realisation phase is included in the overall planning timeline.

Our specialist team works with clients across the wealth and investment management industry to ensure project success. If you would like to discover more about how we can help you and your business, please contact us.

Meet the author

These are most typically financial business line set-ups, operational transformation initiatives, and major systems solution implementations. ​